It’s nearly a year since we last updated our landlords about the Renters Reform Bill. With subsequent changes in Government leadership, there have been many changes in Housing Ministers too. Together these have resulted in the proposed legislation finally having its first reading in the House of Commons last month.
In the original proposal 12 months ago the bill looked to:
Strengthen Landlords rights by reforming the evidence required for landlords to regain possession of their properties. Introducing new and stronger grounds for repeated incidences of rental arrears and reducing notice periods for anti-social behaviour. The legislation also looked to abolish section 21, no fault eviction notices.
Protecting renters by introducing a new Ombudsman to counter rogue landlords and apply the Decent Homes Standard to the private rented sector to ensure tenants have safer, better quality and better value homes.
The White Paper also outlined:
- it will be illegal for landlords and agents to have blanket bans on renting to families with children or those in receipt of benefits, and it will be easier for tenants to have pets
- doubling of notice periods for rent increases with tenants having stronger powers to challenge if they are unjustified
- new property portal to assist landlords to comply with their responsibilities and tenants' information to tackle rogue operators.
- There are over 4 million privately rented properties in the UK housing market. With pressures on mortgage rates and the cost of living crisis the demand for rented properties has reached an all time high. The Government therefore has to walk a tightrope of redressing the balance of power as it sees, between landlords and tenants without pushing so far that private landlords sell their portfolios and increase the demand even further.
Replacing Section 21 Notices
The main concern for landlords has been losing the security of the Section 21 notices when looking to regain possession of their properties for whatever reasons. To counter this the legislation has increased provisions under Section 8.
This would now include a new ground for repeated serious arrears making eviction mandatory where a tenant has been in at least two months’ rental arrears three times within the last three years, regardless of the arrears balance at the subsequent hearing.
There is also the provision that a landlord can apply Section 8 to a tenancy agreement if they wish to sell the property or allow a family member to move in, which can apply after a tenant has been in the property for at least six months.
These changes have led some commentators to state that the eviction powers for landlords may actually be increased under the proposed legislation. However, others are concerned that the new procedures will incur lengthy delays in gaining back possession of properties and if they will have sufficient grounds to do so.
Historically, our lettings portfolio has not relied heavily on Section 21 notices with over 80% of our tenancies ending on behalf of the tenant. So these changes may not impact our landlords as much as they would in other areas of the country.
Assured Shorthold Tenancies
The bill also looks to simplify the existing tenancy structure by proposing that all rental properties will move from fixed term tenancies to a new periodic tenancy, rolling every month without having a specific end date. The hope is that this would provide increased security for private renters looking for longer term tenancies. Those entering a tenancy agreement would then need to provide two months’ notice when leaving and landlords can only evict a tenant under ‘reasonable circumstances’ using the provisions under Section 8 outlined above.
There would also be a new rent review clause where landlords would be expected to give 2 months’ notice of any rent increase and these would be limited to one per year to provide security for tenants.
What happens next?
The Rental Reform Bill is currently waiting for a date for its second reading in the House of Commons where MPs can debate the main principles. Much can happen between this and the proposed legislation coming into practice, so we expect more updates as it progresses through the House, which we will naturally keep you updated.
With new legislation constantly changing, our lettings experts can help you enjoy hassle-free property management and discuss different aspects of this Bill and other legislation that may affect your letting portfolio. Get in touch with our team for expert advice.